THREE-A RESOURCES BERHAD: Navigating Headwinds in Q1 2025
As a seasoned observer of the Malaysian market, I always look forward to delving into the latest financial reports from our homegrown companies. Today, we’re dissecting the First Quarter 2025 (Q1 2025) earnings report from THREE-A RESOURCES BERHAD (TAR). This report offers a crucial glimpse into the company’s performance amidst a challenging global economic environment, highlighting both areas of resilience and the hurdles it continues to face.
While the company recorded a dip in profit compared to the same period last year, it’s not without its silver linings. Notably, revenue saw a sequential increase from the previous quarter, and the company has maintained its dividend payout. Let’s unpack the key figures and strategic moves that define TAR’s start to 2025.
Q1 2025 Performance: A Mixed Bag of Results
THREE-A RESOURCES BERHAD’s Q1 2025 results present a nuanced picture. While revenue experienced a dip when compared to the first quarter of last year, it showed a positive sequential growth from the immediate preceding quarter. Profitability, however, faced headwinds, primarily due to lower average selling prices and the absence of one-off foreign exchange gains seen in the prior quarter.
Key Financial Highlights (Q1 2025 vs Q1 2024)
Comparing the current quarter with the same period last year reveals some contractions:
Q1 2025
Revenue: RM133.94 million
Profit before Tax: RM13.32 million
Profit net of Tax: RM9.96 million
Basic Earnings per Share: 2.05 sen
Q1 2024
Revenue: RM148.76 million
Profit before Tax: RM14.69 million
Profit net of Tax: RM12.68 million
Basic Earnings per Share: 2.59 sen
Revenue for Q1 2025 decreased by 10.0% to RM133.94 million from RM148.76 million in Q1 2024, primarily attributed to lower quantities of products sold. Consequently, profit before tax saw a 9.3% reduction, settling at RM13.32 million compared to RM14.69 million in the corresponding quarter last year, mainly due to lower average product selling prices. Profit net of tax also declined by 21.4% to RM9.96 million.
Sequential Performance (Q1 2025 vs Q4 2024)
A look at the immediate preceding quarter provides a different perspective:
Q1 2025
Revenue: RM133.94 million
Profit before Tax: RM13.32 million
Q4 2024
Revenue: RM126.37 million
Profit before Tax: RM18.33 million
Encouragingly, the Group’s revenue for the current quarter increased by 6.0% to RM133.94 million compared to RM126.37 million recorded in the immediate preceding quarter, driven by higher quantities of products sold. However, profit before tax decreased by 27.3% from RM18.33 million in the immediate preceding quarter. This decline was largely due to foreign exchange gains that were recorded in Q4 2024, which did not recur in Q1 2025.
Financial Health and Cash Flow
Beyond the top and bottom lines, the balance sheet and cash flow statements offer deeper insights into the company’s financial robustness.
Condensed Consolidated Statement of Financial Position (as at 31 March 2025)
| Item | 31-Mar-25 (RM’000) | 31-Dec-24 (RM’000) | Change (RM’000) |
|---|---|---|---|
| Total Assets | 532,248 | 535,261 | (3,013) |
| Total Equity | 487,820 | 477,859 | 9,961 |
| Total Liabilities | 44,428 | 57,402 | (12,974) |
| Net Assets Value per Share (sen) | 100.37 | 98.32 | 2.05 |
The company’s financial position remains solid. Total equity saw a healthy increase, reflecting the retained earnings from the period. A significant reduction in total liabilities, particularly current liabilities, is a positive sign, indicating improved short-term financial management. The net assets value per share has also incrementally risen, which is a good indicator for shareholders.
Cash Flow Performance
Cash flow from operations saw a decrease in Q1 2025 compared to the same period last year. This is consistent with the lower profit before tax. However, the company maintains a strong cash and bank balance, demonstrating liquidity.
Q1 2025
Net Cash from Operating Activities: RM7.31 million
Cash & Cash Equivalents (End of Period): RM88.29 million
Q1 2024
Net Cash from Operating Activities: RM11.35 million
Cash & Cash Equivalents (End of Period): RM63.77 million
While net cash generated from operating activities was lower, the company’s cash and cash equivalents at the end of the period stood significantly higher than the previous year’s corresponding quarter, indicating a healthy cash reserve position.
Navigating Risks and Charting Future Prospects
THREE-A RESOURCES BERHAD acknowledges the persistent challenges in the current economic climate, particularly the volatility in raw material costs, influenced by ongoing geopolitical events, and the broader uncertainty of the global economic landscape, including threats of protectionism policies in global trade.
Despite these headwinds, the management remains focused on strategic initiatives to ensure sustained performance. Their core strategies include:
- Efficiency Initiatives: Emphasizing economies of scale and continuous cost optimization.
- Productivity Enhancement: Efforts to increase operational efficiency and output.
- Quality Assurance: A commitment to delivering high-quality products to maintain market position.
- Strategic Expansion: Continuing with expansion plans for newly acquired lands in the vicinity of existing factories, signaling long-term growth ambitions.
The directors are cautiously optimistic, anticipating a satisfactory performance for the financial year 2025, barring unforeseen circumstances. This outlook is grounded in their ongoing efforts to manage costs, enhance productivity, and strategically expand their operational footprint.
Shareholder Returns: A Consistent Dividend
In a positive move for shareholders, the Board of Directors declared a first interim single tier dividend of 1.0 sen per ordinary share for the financial year ending 31 December 2025. This amounts to RM4.86 million and matches the dividend payout from the previous year, demonstrating the company’s commitment to returning value to its shareholders despite the challenging operating environment.
The entitlement date for this dividend is fixed on June 6, 2025, with payment scheduled for June 26, 2025.
Summary and
THREE-A RESOURCES BERHAD’s Q1 2025 report reflects a company diligently navigating a complex economic landscape. While year-on-year revenue and profit faced pressure from lower selling prices and product quantities, the sequential revenue growth and strong balance sheet, coupled with a consistent dividend payout, highlight the company’s underlying resilience and prudent financial management. The strategic focus on efficiency, cost optimization, and long-term expansion plans positions the company to tackle future challenges and capitalize on opportunities.
However, investors should remain mindful of the external factors that could influence future performance. Key risks to consider include:
- Raw Material Price Volatility: Ongoing geopolitical events could continue to impact input costs, potentially squeezing margins.
- Global Trade Protectionism: The threat of protectionist policies could affect export volumes and market access for the company’s products, given its significant international revenue contribution (39% from ‘Other countries’ and 9% from Singapore).
- Competitive Landscape: The manufacturing industry is inherently competitive, and pricing pressures could persist.
Overall, the report suggests a stable foundation, but future performance will heavily depend on the effective execution of its efficiency and expansion strategies, alongside the broader economic climate.
What Are Your Thoughts?
THREE-A RESOURCES BERHAD has shown its
